2018 (4) TMI 816 - AT - Central Excise

CENVAT credit - inputs - duty paying documents - it was alleged that credit availed on improper documents and without receipt of impugned inputs into the factory - denial of cross-examination - Held that - Reason for denying the cross examination are mentioned in section 9D itself. The same should be recorded. In the present case neither an opportunity for cross examination has been provided nor the reasons attributable under section 9D were recorded - appellant-noticee should be provided with all the documents which were recovered from their premises and also be provided fair opportunity to defend their case. The matter remanded back to the original adjudicating authority with the direction to decide the case afresh following the provisions of section 9D - appeal allowed by way of remand.

Summary

Issues: Violation of principles of natural justice in denying cross-examination and documents for defense, imposition of penalties under Central Excise Act, 1944, eligibility of Cenvat Credit on inputs, appeal against order of Commissioner (Appeals), Alwar.

Analysis:
1. Violation of Principles of Natural Justice: The main issue in this case revolves around the violation of principles of natural justice. The appellants contended that the original authority's proceedings were in serious violation of natural justice as they were denied the opportunity for cross-examination. The appellants argued that their defense heavily relied on cross-examining various persons whose statements were being used against them. The original authority's refusal to allow cross-examination severely handicapped the appellants in presenting their case. The appellants cited various legal precedents to support their argument, emphasizing the importance of providing an opportunity for cross-examination when statements are relied upon by the adjudicating authority.

2. Denial of Documents for Defense: Another crucial aspect of the case was the denial of essential documents for the defense of the appellants. The appellants highlighted that crucial documents, including non-RUD, were not supplied to them, making it challenging for them to defend their case effectively. The appellants requested the supply of these documents to enable them to present a robust defense. The absence of vital documents due to the seizure of connected documents during the investigation severely impacted the appellants' ability to defend themselves adequately.

3. Imposition of Penalties: The original authority imposed penalties on the appellants under the Central Excise Act, 1944, for allegedly availing Cenvat Credit on improper documents and without the receipt of impugned inputs into the factory. The penalties were imposed under section 11AC of the Central Excise Act, 1944, and Rule 15(2) of the Central Excise Rules, 2004. Additionally, various penalties were imposed on other appellants in accordance with Rule 26 of the Central Excise Rules, 2002. The appellants contested these penalties, emphasizing the need for a fair opportunity to defend themselves and the importance of following due process.

4. Eligibility of Cenvat Credit: The dispute in this case primarily focused on the eligibility of Cenvat Credit on inputs during the financial years 2010-2011 to 2013-14. The Revenue initiated proceedings against the main appellant and others, denying the Cenvat Credit availed by the appellant firm on the grounds of improper documents and non-receipt of inputs into the factory. The original authority held that the appellants were not eligible for the Cenvat Credit and ordered its reversal. The case highlighted the importance of complying with the Cenvat Credit Rules, 2004, and the necessity of proper documentation and receipt of inputs for availing such credits.

5. Appeal Against Commissioner (Appeals) Order: The appeals of the 11 appellants were filed against the common order dated 27.10.16 of the Commissioner (Appeals), Alwar. The main appeal was from M/s. Altech Infrastructure India Pvt. Ltd., Bhiwadi, while the other appellants contested the penalties imposed on them. The appellate tribunal, after considering the arguments presented by both parties, set aside the impugned order and remanded the matter back to the original adjudicating authority. The tribunal directed the authority to decide the case afresh, ensuring compliance with section 9D and providing the appellants with the necessary documents for a fair opportunity to present their case effectively.